Siemens (SI) Aims to Block GE (GE) from Gas-Turbine Market, Will Spend Billions to Do So

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If General Electric (NYSE: GE) wants to continue its expansion in the gas-turbine market, it may have to take down Siemens (NYSE: SI) first.

Reports out Thursday suggest the German industrial giant Siemens is looking to spend about $1.3 billion on the expansion of its gas-turbine production process. With gas-turbines seeing increased demand -- sales are expected to grow about 9 percent annually -- the investment will help Siemens take hold of the German region and further expansion in global markets.

Bloomberg notes Siemens' focus on gas-turbines and an increase in U.S. shale-gas output should bode well as GE and Alstom SA are both focusing more on steam-turbine development. Additionally, one Deutsche Bank analyst said the market for power plants to upgrade turbines in an effort to meet tougher emissions standards could soon reach $100 billion. The drop in natural gas prices may also tempt many utilities away from coal, providing even a bigger market for gas-turbine installations.

Siemens currently has 1,300 gas turbines installed globally and has nearly doubled its market share to 40 percent over the last few years. CEO Peter Loescher hopes the Fossil division, an earnings driver in the past, will help push Siemens above €100 billion in revenue annually. Last year, about 14 percent of Siemens' €74 billion in revs came from its Fossil Power Division, which oversees gas-turbine production.

With gas-fired plants cleaner to run, as well as faster and cheaper to build, look for more and more companies to switch to the facilities in the near future. Siemens already has pending builds in Charlotte, NC and Berlin, and will also be starting projects in Saudi Arabia and St. Petersburg, Russia.

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